India’s Dual Connectivity Projects In Eurasia Can Accelerate De-Dollarization

There are plenty of reasons to be optimistic about the de-dollarization of trade across Asia due to the integral role that India is poised to play in this respect via the North-South Transport Corridor through the Eurasian Heartland and the Vladivostok-Chennai Maritime Corridor across the Eurasian Rimland. It’ll of course take a lot of time for tangible progress to be made, but the basis for doing so is being established before everyone’s eyes as a result of last week’s developments.

The past week saw several highly important Eurasian connectivity developments that missed the notice of most observers. A Russian delegation led by Deputy Prime Minister Denis Manturov wrapped up their visit to Delhi, during which time they explored pathways for scaling up India’s exports by the whopping five times that the latter previously declared is its goal. This was followed a memorandum of understanding over transit and trade cooperation that was reached in Moscow between Russia and Iran.  

At the tail end of the week, the railway companies of Russia, Kazakhstan, and Turkmenistan agreed to their own memorandum “to form competitive tariff rates and ‘seamless’ transportation of goods from [their countries] to Iran, India, the countries of the Middle East and the Asia-Pacific region”. This was then followed by the chief executive of Iran’s Transport Development Fund announcing the possibility of Russian and Indian investments in his country’s infrastructure.

Finally, Sunday saw Indian Ministry of Ports, Shipping and Waterways Sarbananda Sonowal inaugurate a slew of projects in Chennai that he said will supercharge the Vladivostok-Chennai Maritime Corridor (VCMC) with Russia. This development complements the prior ones over the past week regarding the progress that was made on the North-South Transport Corridor (NSTC) between them, Iran, Central Asia, and at least officially, also Azerbaijan (provided that regional tensions don’t preclude Baku’s future role).  

Taken together, the NSTC and VCMC represent the two most significant non-Chinese Eurasian connectivity projects, which serve the purpose of fostering South-South integration in ways that preemptively avert the scenario of potentially disproportionate dependence on the People’s Republic. All parties have strong trade ties with Beijing, but none of them want its growing role in global economic affairs to replace Washington’s declining one. Rather, they want it to unlock new opportunities for them.

India’s dual connectivity projects that’ll integrate the Eurasian Heartland via the NSTC in parallel with doing the same as regards the Eurasian Rimland via the VCMC (keeping in mind that it’ll transit through trade powerhouse ASEAN) provide a unique chance to accelerate financial multipolarity processes. Prioritizing the use of national currencies in their exchanges across these routes instead of third-party ones like the dollar or yuan can establish the basis for exponentially scaling bilateral trade with time.

India is currently the world’s fifth-largest economy and on track to become its third-largest one by the end of the decade, which pairs perfectly with its envisaged role of informally leading the Global South amidst the impending trifurcation of International Relations. On the financial front, the rupee’s planned internationalization can be facilitated by encouraging its NSTC-VCMC partners to employ the new de-dollarization model that it rolled out with Bangladesh last week.  

As summarized in the preceding hyperlinked analysis: “all the exports of the smaller partner in any given pair will be de-dollarized, while the larger partner will then match that with their own exports. This pragmatic policy ensures that there’s enough national currency in circulation to meet their minimal bilateral trade needs while also keeping a comfortable amount of dollars circulating to facilitate their trade with other countries that still feel more comfortable using the greenback.”

The abovementioned acceleration of financial multipolarity processes would be multiplied upon this model being employed by India’s NSTC-VCMC partners in ASEAN, Azerbaijan, the Central Asian Republics (CARs), Iran, and Russia, not to mention if the Republic of Korea (ROK) and Japan hopped on board too. Those two might remain reluctant to trade with Russia due to their US patron’s pressure, but they can still de-dollarize their trade with India by taking advantage of the latter’s VCMC vision.

Looking forward, there are plenty of reasons to be optimistic about the de-dollarization of trade across Asia due to the integral role that India is poised to play in this respect via the NSTC-VCMC. It’ll of course take a lot of time for tangible progress to be made, but the basis for doing so is being established before everyone’s eyes as a result of last week’s developments. Observers would therefore do well to monitor this trend since it’s among the most important financial ones unfolding nowadays, however gradually.